It's always concerning how much dilution can occur in order to...

It's always concerning how much dilution can occur in order to get a mining project off the ground, but in this instance I don't see any reason for BCK needing to do a share offer nor undertaking a credit raising.

Under the terms of the agreement signed with Min Resources for it to 'own' 50% of Marillana's operations - Min Resources is 100% funding the building of the railway and port; Funding up to $150 million for mine site development plus procuring up to a $150 million loan for BCK to fund its share of mine site development, with repayments to be determined in future; and Min Resources loaning BCK $10 million interest free for working capital - with this $10 million to be repaid from mine earnings.

For anyone interested, the details of the joint venture agreement are included in Brockman's 2018 Annual Report which is accessible at its website, part of which is copy and pasted below.

I've been holding Brockman since its Yilgarn days in 2005/6 and when the Min Resources joint venture came about I thought it was a pretty good deal for us holders. BCK is pretty much in the passenger seat as it's up to Min Resources to get the railway and port built, but given the stuffing around Min Resources is getting from the WA government around berth allocation at South West Creek in Port Hedland, I don't know if Min Resources will meet its rail and port obligations by 31 December 2020. Below is a cut and paste of the terms and dates. The year dates have subsequently been changed to 2020 and 2022.

Mine to Ship Logistics Agreement

Under the FJV Agreement, MRL (or a subsidiary) will construct (at its own cost) and operate a rail and port infrastructure system in accordance with the following timeline:

1. (i) construction is to commence on or before 31 December 2019; and

2. (ii) operation is to commence on or before 31 December 2021.

The rail and port infrastructure system comprises a light railway connecting Marillana to the port of Port Hedland plus train unloading, product stockpiling, reclaim and ship-loading facilities connected to a deep water cape-size berth at South West Creek in the inner harbour of Port Hedland.

The rail and port infrastructure system provision and cooperation will be reflected in the Mine to Ship Logistics Agreement with MRL (or a subsidiary) granting them an exclusive life of mine right to provide the transport of the product by train from Marillana site

to the inner harbour of Port Hedland, unloading and stockpiling of product at the port, followed by reclaim and ship loading. The parties have agreed on a provisional service fee subject to standard escalation clauses typical for an agreement of this nature.

Reasons for the transaction

The key to unlocking the value of the Group’s highly prospective iron ore mineral tenements relies on securing a rail and port infrastructure solution and funding. The Directors consider that under the joint venture, the Company would partner with an established mining corporation based in Australia as well as obtaining the necessary funding and access to rail and port infrastructure for Marillana to realise its full potential value.

Schedule

Processing plant

Following execution of the Process and Loading Agreement, MRL (or a subsidiary) will construct the processing plants under a build, own and operate arrangement for Marillana. The plant construction is expected to commence in the second quarter of calendar year (CY) 2019 (aligned with commencement of construction of the railway) with commissioning and operations by the fourth quarter of CY 2020. Target production from Marillana upon the availability of rail and port system will be 20 to 30 Mtpa.